Africa: Phantom Technical Assistance

Editor's Note

"Technical assistance - donor spending on consultants, training and
research - is one of the most heavily criticised forms of aid. ...
[yet it is] still one of the most heavily used forms of aid,
accounting for between a quarter and a half of all ODA [Official
Development Assistance]." A significant proportion of this aid,
charges ActionAid in a new report, is both over-priced and
ineffective.

Technical assistance can be useful, argues the report, but only if
it is made more accountable to country needs than to donor
interests. This AfricaFocus Bulletin contains excerpts from the
ActionAid report citing the problems with current technical
assistance and recommending changes. Another AfricaFocus Bulletin
also sent out today contains excerpts from another chapter of the
same report focused on factors distinguishing "phantom aid" from
"real aid."

Real Aid 2

Chapter 2: Making Technical Assistance Work

Fundamentally, technical assistance often fails because it is:

donor-driven: skewing country priorities and accountability
relations

out-dated: based on a development model that has been shown to
fail.

Such failures are particularly concerning given that many southern
countries do face capacity shortages in crucial areas. Donors can
play a role in supporting country efforts to strengthen capacity.
...

Making technical assistance work will require:

southern countries taking more control over capacity building

a shift from one-sided conditionality to mutual commitments from
donors and southern governments

countries being free to determine their own paths to development

the recognition that development is an indigenous, locally driven
process.

Technical assistance - donor spending on consultants, training and
research - is one of the most heavily criticised forms of aid.
Damning critiques go as far back as 1969, with the Pearson
Commission noting that it was, "little related to development
objectives". By 1993 the critiques had hardened, with then World
Bank vice president Edward Jaycox describing it as, "a systematic
destructive force that is undermining the development of capacity."
Bilateral donors have been equally scathing, with Eveline Herfkens,
then Dutch Minister for Development Co-operation, noting in 2002
that: "The presence of so many experts in Africa in particular has
undermined the confidence of countries in their own abilities.
Technical assistance has not done enough to give poor countries the
ability to stand on their own two feet." Even the typically
understated OECD acknowledged recently that there was little
evidence of the effectiveness of technical assistance, and that
higher levels have shown no positive impact on economic
performance.

Yet despite these critiques, technical assistance is still one of
the most heavily used forms of aid, accounting for between a
quarter and a half of all ODA [Official Development Assistance].
... New ActionAid research in five African and Asian countries
shows that a significant proportion of current technical assistance
is:

ineffective: failing to build long term capacity and reduce
poverty

over-priced: with high salaries being paid to expatriate
consultants.

Why has technical assistance failed to build capacity?

... the underlying cause of technical assistance's failure to build
capacity is that projects have often been donor-driven and have
lacked southern country ownership and leadership. Technical
assistance is commonly seen by governments as a 'free good',
accepted because it brings other benefits, such as access to other
forms of aid, rather than capacity development. It has been heavily
over-supplied in relation to demand. Donor dominance has increased
failure rates because it has led to the adoption of the wrong model
where it is assumed that an expert with generic knowledge can
simply pour knowledge onto a needy recipient, whether they want
this knowledge or not.

This donor-dominated, international-expert-led model has
contributed to a failure to build capacity in seven main ways:

(a) Technical advisers are often under pressure from donors and
governments to 'get the job done' rather than take extra expensive
time to build capacity. Some advisers are provided specifically in
order to fill gaps, with capacity building seen as a side effect at
best. Contracts don't usually include performance indicators on
capacity building. In Ghana, for example, we found no example of
payment on a contract being dependent on the transfer of skills, or
of non-payment as a result of technical assistance failing to build
capacity. ...

(b) Advisers often have real incentives not to pass on knowledge to
their counterparts. Their continued employment may hinge on the
existence of capacity gaps. In Ghana, some government officials
argued that donor-funded advisers perpetuated their stay by failing
to transfer skills to counterparts.

(c) Technical advisers are more focused on meeting donor demands
than building capacity. Advisers commonly provide outputs, such as
reports, in a format which may meet donor demands but which fails
to be useful to the government. In Ghana, we found that the German
and Japanese official donor agencies, GTZ and JICA, were writing
their education project reports only in German and Japanese, not
English, leaving little scope for local learning from successes and
failures. ...

(d) Advisers have often lacked skills or expertise in building
capacity. Recruitment of technical advisers has tended to focus on
the selection of international 'experts', rather than those who are
able to transfer skills. ...In Ghana, it was found that there had
been no transparent assessment of consultants by the government,
and that no consultant had ever been denied their salary for
failing to perform.

(e) Some governments have not been strategic in their use of
technical assistance. Because so many have been donor-driven,
southern governments have often lacked the motivation to acquire
new skills through technical assistance projects. In Cambodia, one
former adviser noted that: "if the Cambodian boss isn't happy with
the technical adviser, they will give the signal and all the staff
will pretend they don't speak English." In contrast, in Tanzania it
was observed that relatively high government ownership of reforms
in public financial management had ensured that technical
assistance delivered results. ...

(f) Heavy use of expatriate consultants can foster a 'dependency
culture'. Government officials can have reduced incentives to
develop their skills and abilities because they assume that
international experts will always be there to do the job. ...

(g) The common failure of donor co-ordination has fuelled the
problem. ... In Ghana, the effectiveness of technical assistance
for literacy in Ghanaian languages has been undermined by the fact
that GTZ and USAID have run parallel projects in the same
districts, aiming to develop teaching/learning materials. The
projects not only contradicted each other,61 but in the case of
USAID also failed to fit with government policy.

(h) Capacity building initiatives have been undermined by a lack of
policy coherence. This has been in evidence on both the government
and donor side. Donor efforts to train up doctors and nurses have
been undermined by the donor encouraged 'brain drain' of teachers
and nurses leaving for more highly paid positions in rich
countries: 70,000 African professionals leave the continent each
year, according to the OECD. On the government side, low salaries
due to a lack of pay reform often provide few incentives for newly
trained counterparts to stay in government, particularly when more
lucrative opportunities are available elsewhere. This problem is
compounded by stringent IMF imposed macroeconomic policies which
serve to keep wages low, because of concerns about the inflationary
impact of salary increases.

2.2.2 Technical assistance is over-priced

The failure to build long term capacity in southern countries is
particularly concerning given the high cost of technical advisers,
especially expatriate experts. As with the impact of technical
assistance it is very difficult to obtain accurate information
about consultants' charges, but indications are that costs are
generally very high, particularly in relation to local salaries. In
Cambodia, for example, typical adviser costs were found to be in
the region of $200,000 per year, with similar costs observed in
Tanzania. In Ghana, one UNICEF official said that $10,000 per month
was usual for a highly qualified education consultant, which put
them at the lower end of the pay scale, with the World Bank and
African Development Bank paying as much as double this rate.

High salaries paid to expatriate advisers do not only raise
questions in terms of value for money. They can also cause
significant resentment among counterparts and the public in the
south. ... Salary differentials were raised as key concern by
interviewees in Cambodia, Tanzania and Ghana. In the Ghana
education service headquarters, government officials receive about
$300 a month, what a relatively inexperienced Ghanaian consultant
could expect to earn in a day, and a foreign consultant in a few
hours. This was particularly galling to many observers who felt
that expatriate advisers made heavy use of local expertise imparted
by their counterparts in order to understand local culture,
traditions and politics. ...

Why are costs so high?

Once again, the donor-dominated, expert led model is the underlying
cause of overpriced technical assistance. There are five main
reasons why this model leads to inflated costs:

(a) Costs and prices play a very limited role in determining demand
and supply. ... Donors gain advantages such as policy influence or
information from technical assistance and have little incentive to
drive down overall costs as budgets are often determined in
advance. Southern countries - the supposed beneficiaries of
technical assistance - are rarely given the option of spending the
money on something else instead, meaning that prices do not reflect
opportunity costs. Some experts consider the lack of consideration
of opportunity costs to be the major reason for the ineffectiveness
of technical assistance. In Sierra Leone, one UN staff member
stated that: "technical assistance is there for the sake of
technical assistance, mainly because money follows advice." ...

(b) Much technical assistance is officially tied. Technical
assistance, along with food aid, is one of the areas excluded from
the 2001 OECD DAC agreement on untying aid to the least developed
countries. Yet tying raises costs by an estimated 15%-40%,
according to the OECD, with technical assistance likely to be at
the higher end of that scale. This is partly because donor country
firms generally have higher costs than local suppliers, and partly
because restricted competition through tying tends to push up
prices. ...

(c) Donors prioritise their own nationals, even when technical
assistance is not officially tied. Even donors which have
officially untied aid still award the bulk of contracts to their
own suppliers ... There are several reasons for this. Firms from
the donor country often know better what the donor is looking for,
so are best able to design their tenders accordingly. Donors
sometimes only advertise for tenders in their own newspapers, or
only in their own language, excluding local firms or those from
other donor countries. The costs of tendering for large contracts
are often high, benefiting large firms and creating barriers to
entry for new start-up firms. Procurement rules generally mean that
it is important to show a good track record when seeking tenders:
consultancy firms from donor countries, particularly when there is
a history of aid tying, are often better placed to do this.

(d) Heavy use of expatriate advisers inflates costs because of
associated expenses. The OECD, for example, using data supplied by
DFID, cited three cases they described as typical in which the
total cost of expatriate consultants, as in Cambodia and Tanzania,
was in the region of $170,000-$200,000 a year. Of this, salaries
were estimated to amount to less than half, with the remainder
accounted for by cost of living and hardship allowances, travel,
rent, child allowances, school fees and other miscellaneous
expenses. All of these costs would presumably be saved if local
experts were employed. In their typically understated manner, the
OECD themselves have observed that, "such costs seem excessive".

(e) The technical assistance market is highly inflexible, and
competition is severely limited. This is particularly true where
donors insist upon or encourage the use of their experts, meaning
that alternatives cannot be explored, severely reducing competition
and therefore increasing prices. Donors often refuse to share
information, further increasing transaction costs. ...

2.3 Efforts to Reform Technical Assistance

Faced with a barrage of critiques of the system over the years,
there have been some efforts, both internationally and on the part
of individual donors, to reform the way they provide technical
assistance. Countries such as Botswana have also made efforts to
improve the way technical assistance is provided. To various
degrees, these efforts have yielded results. But they still fall
far short of the fundamental overhaul of the system that is needed.

2.3.1 International reform efforts

The most prominent international effort to reform technical
assistance was the National Technical Co-operation Assessment and
Programmes (NatCAP), which started in the early 1990s. Led by the
UNDP, the programme worked with more than 30 governments in Africa.
The aim was to launch national programmes of reflection on
technical assistance, which would lead to the adoption of coherent
national policies and priorities. At the same time, the OECD in
1991 adopted a set of principles on the issue, emphasising the
central role of governments, partnership, participatory
development, greater attention to cost and cost effectiveness and
a focus on more comprehensive programme approaches. Yet neither of
these new initiatives really succeeded in bringing about widespread
change on the ground.

More recently, the 2005 Paris Declaration on Aid Effectiveness
committed donors to improving the harmonisation of their aid
procedures and systems, with southern countries taking the lead
within a framework of mutual accountability. Donors committed to
using country systems and procedures 'to the maximum extent
possible', including for procurement. However, it is on technical
assistance that the Paris Declaration is especially weak. The 2010
target committed to in the Paris Declaration is that, "50% of
technical co-operation flows are implemented through co-ordinated
programmes consistent with national development strategies."
Leaving aside the fact that 50% is a low target in itself, the
wording gives donors a free rein to interpret as they see fit. ,,,

2.3.3 Reform efforts by individual bilateral donors

Some donors, notably the Netherlands, Sweden and Ireland, have made
substantial changes to their technical assistance policies.

The Netherlands have introduced the most far-reaching reforms.
Their policy recognises that traditional technical assistance the
long term assignment of experts is an anachronism and argues that
technical assistance is only useful where it is focused on long
term capacity building, that is demanded and controlled by southern
countries as part of wider nationally owned strategies for
development. The Dutch government has disbanded the department that
was responsible for sending Dutch expertise to developing countries
and is phasing out subsidies to a placement agency. The Dutch
government has stated that in future, Dutch funding of technical
assistance will only be provided in the context of programmes
initiated and funded by aid recipients.

Sweden has, according to its official statements, almost entirely
abandoned all direct contracting of technical assistance by its aid
agency SIDA. Sweden is officially committed to ensuring that
technical assistance is procured, contracted and managed by
recipients. Sweden's official policy states that: "Sweden has in
principle decided against a continuation of technical assistance,
but it is still provided at a very reduced level. Sweden opposes
the sending of bilateral technical assistance professionals for
project implementation. Local consultants have been increasingly
employed in the last years in Swedish technical assistance."
However, Sweden does continue to provide some of its own long term
experts. ...

The Irish government has heavily cut down its technical assistance
provision, and no longer provides it directly to the countries in
which it works, instead offering grants to NGOs. However, Ireland
does continue to fund a number of technical assistance trust funds
with multilateral agencies, including an European Bank for
Reconstruction and Development trust fund, and also holds a number
of trust funds at the World Bank.

2.3.4 Country led reform efforts

A number of southern countries,
increasingly discontented with donor technical assistance, have
initiated their own reform efforts.

In Botswana, all technical assistance is channelled through
national planning and budgeting systems. All aid funded projects
must be included in the national development plan, which is
approved by parliament. All technical assistance is contracted by
the government, integrated into the human resource planning of the
public service and assigned to established posts. There are no
separate project and advisory posts. Crucially, the government is
willing to refuse any assistance that does not meet Botswana's
needs.

In Tanzania, the government is in the process of developing a new
policy on technical assistance, based on its own assessment of its
capacity needs. Although this work remains in its early stages,
some efforts at reform have already been made and early results are
encouraging. Tanzania has encouraged a shift towards more
government procurement and use of local consultants. According to
interviewees in Tanzania, this has led to a shift to greater
Tanzanian government ownership and has helped to ensure that
technical assistance is better linked to the government's own
plans.

Chapter 3: Recommendations for Making Technical Assistance Work

...

Official aid is at a crossroads. The $50 billion annual increase
that was pledged in 2005 at the G8 summit in Gleneagles will test
the current system and bring its shortcomings into stark relief.
Technical assistance is foremost among the areas that need reform
if a dramatically enlarged aid system is going to achieve lasting
change in the world's poorest countries. ....

Where technical assistance is led and managed by the recipient
country, addresses a specific constraint and is time-bound and
outcome-focused, it can help build the capacity of poor countries
and help them on the path to poverty reduction. But as this report
has shown, it currently sits like a fossilised relic within the aid
system, at odds with the principles of country ownership and
partnership that donors have espoused over the last decade. Instead
of fixing a problem, too much technical assistance is either having
no significant impact or a negative impact - a case of phantom aid
creating phantom capacity that dissipates as soon as the expatriate
consultant returns home and the donor funding dries up.

For technical assistance to be 'real', reform needs to be anchored
in four underlying principles - putting recipient countries in the
lead; giving them the freedom to choose their own development path;
mutual accountability between donors and recipients; and country
specificity. This means poor countries must start taking
responsibility for defining their own capacity building needs in
line with their national development strategies. They must draw up
plans for how to meet these needs, identifying what support, if
any, they need from donors. It also means donors should provide
high quality, flexible and predictable aid to help countries
implement their capacity building plans, and should not provide any
technical assistance outside of these plans. And both governments
and donors should be held to account by parliaments, NGOs, women's
groups, the media and other civil society groups for ensuring that
funds are used to build effective capacity in a way that respects
countries' rights to determine their own development strategies.

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